Auto insurance shopping activity remained at historically high levels in 2024, with an 18% year-over-year increase in consumers searching for new policies, according to the latest LexisNexis® U.S. Insurance Demand Meter. However, despite the surge in shopping, fewer consumers ultimately switched policies due to rate increases that reduced potential savings.
According to the report, 45% of policies-in-force were shopped at least once in the past year, demonstrating the continued volatility in the auto insurance market. In Q4 2024 alone, shopping increased by 26% year-over-year, while new policy growth lagged behind at 17.7% -- a sign that consumers were actively seeking better rates but often choosing to stay with their current insurers.
"In the first half of 2024, when consumers shopped their policies, they were looking for opportunities for discounts and were willing to switch," said Chris Rice, vice president of strategic business intelligence at LexisNexis Risk Solutions. "However, that trend reversed in the latter half of the year, with shopping growth outpacing new business, as carriers in a number of states had implemented rate increases, making it harder for consumers to find savings attractive enough to follow through and switch."
Holiday Season Slowdown and Regional Variations
Despite the year-over-year growth, the number of new policies issued declined in November and December, aligning with typical seasonal trends as consumers prioritized holiday spending over insurance shopping. However, this seasonal dip was sharper than in previous years, likely due to increased rate parity across carriers, which reduced the availability of significantly lower-priced policies.
Regionally, most states saw pre-hard market shopping and new business volumes return, except for New York and Hawaii, which continued to struggle. New York, in particular, experienced a deeper decline in new policy growth, remaining below Q4 2020 levels despite insurers implementing rate increases in line with industry averages. According to the report, underwriting restrictions and limited marketing efforts in the state may have contributed to the sluggish recovery.
Looking Ahead: Competition for Consumers Intensifies
With fewer consumers switching policies, insurance carriers are expected to focus on strategic marketing and pricing strategies to attract new customers while maintaining policyholder retention. Targeted marketing campaigns have already played a significant role in driving shopping activity, and industry experts predict that insurers will need to carefully balance competitive pricing with customer retention efforts.
"Marketing and pricing strategies will be the key differentiators as insurers work to attract new customers while retaining existing policyholders," said Jeff Batiste, senior vice president and general manager of U.S. auto and home insurance at LexisNexis Risk Solutions.
Additionally, insurers may face further challenges in 2025, as catastrophic weather events -- including wildfires in California and winter storms in the South -- could prompt further rate increases. While auto insurance pricing has largely stabilized for now, ongoing losses from natural disasters may drive continued premium hikes, which could again shift consumer shopping behavior.
